PriyaPatel
TLDR:
- The Small Business Administration (SBA) faced setbacks in allowing fintech participation in the 7(a) loan program.
- Funding Circle, a fintech lender, plans to focus on its U.K. operations and has faced criticism from lawmakers about its SBLC license.
In a recent development, Funding Circle, a fintech lender, announced plans to shift focus to its U.K. operations, raising doubts about the SBA’s efforts to expand nonbank participation in the 7(a) loan program. Lisa Jacobs, CEO of Funding Circle, revealed that the company had incurred losses in 2023 and believes that investing in the U.S. business may not be the best use of capital. This decision sparked criticism from lawmakers like Sen. Joni Ernst and Rep. Dan Meuser, who expressed concerns about SBA’s due diligence on SBLC risk.
Despite the setbacks, Funding Circle remains committed to launching its SBA lending operations next month. The company has received interest from third parties regarding its U.S. operations, but has denied using the SBLC license as a bargaining chip in potential sale negotiations. Funding Circle aims to support small businesses and has lent billions to thousands of enterprises since entering the U.S. market in 2013.
Additionally, SBA Administrator Isabel Casillas Guzman defended the agency’s SBLC policy, emphasizing its goal to widen access to capital for underserved groups. She also expressed the agency’s desire to resume direct lending, a proposal included in President Joe Biden’s fiscal 2025 budget plan. However, Republican lawmakers have raised concerns about SBA’s direct lending plans, fearing competition with the private sector.
